Obama Wants Businesses to Pay More Employees Overtime

Will Yakowicz is a staff writer for Inc. magazine. He has reported from the West Bank and Moscow for Tablet Magazine; covered business, crime, and local politics for The Brooklyn Paper; and was the editor of Park Slope Patch. He lives in Brooklyn, New York.

President Obama will use his executive authority to change overtime rules for U.S. workers in an effort to provide economic security for the middle class and reduce income inequality, a White House official said.

According to the official, Obama will direct the Department of Labor on Thursday to begin the process of rewriting overtime pay protections for millions of workers, a move that could have a substantial impact on businesses. The new rules will affect employees who have been labeled "executive, administrative, or professional" by their employers, making them ineligible for overtime.

According to The New York Times, the economic inequality the president is trying to combat stems in part from the fact that corporate profits have reached record high levels since the 1980s, while wages have stayed the same for most U.S. workers.

Obama is seeking to change the rules--originally passed by Congress in 1938 under the Fair Labor Standards Act--under which businesses can use a "white-collar exemption" to deny overtime to any employee who performs executive, administrative, or professional duties.

The President's executive order is likely to face resistance from Republicans and business groups during a public comment period before the Department of Labor approves the changes.

Daniel Mitchell, a senior fellow at the Cato Institute, a libertarian think tank, tells the Times that if Obama's order goes through, employers are likely to cut wages and positions. "If they push through something to make a certain class of workers more expensive, something will happen to adjust," Mitchell says.

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